LinkedIn CEO Reveals Why Their IPO Was Successful, Unlike Facebook

LinkedIn Corporation (NYSE:LNKD) chief executive Jeff Weiner shared his wisdom at Business Insider’s Ignition conference held today in New York City. If you remember, Facebook Inc (NASDAQ:FB)’s flop IPO has been the biggest tech story of the year.

Well, in some ways it proved good for Facebook Inc (NASDAQ:FB). The hyped IPO helped Facebook fetch as much money as possible from investors. It was bad because investors lost tons of their money within days, which created a negative vibe against the Menlo Park, California-based social media giant. Facebook stocks are still trading far below their IPO price of $38 a share.

Now let’s have a look at LinkedIn Corporation (NYSE:LNKD)’s IPO, which was priced at $45. And on the very first day of trading LinkedIn stocks were trading above $100. Amazing, isn’t it? LinkedIn missed some money by pricing the IPO low, but the hefty increase in prices gave it a healthy glow. And, investors still remain crazy for LinkedIn stock.

The LinkedIn IPO is among one of the most successful tech IPOs. In fact, a lot better than Facebook Inc (NASDAQ:FB), Zynga Inc (NASDAQ:ZNGA), and Groupon Inc (NASDAQ:GRPN). LinkedIn CEO Jeff Weiner was asked by the editor-in-chief of Business Insider during the IGNITION event whether he regretted pricing the IPO lower. Weiner firmly said no. He said he wanted to attract blue chip, long-term investors, so they priced the IPO accordingly to accomplish that goal.

However, Weiner warns that there isn’t any “one-size-fits-all solution” for companies going public. There are a lot of variables – the liquidity, the valuation, the kind of investors you want to attract, the number of orders coming, etc. Weiner said that IPOs are like marriage. When you have been in a long-term relationship with someone, people around you will start asking, “When are you guys getting married?” Similarly, if you are a successful privately held company, lots of people would ask, “When is the IPO?”

He said that the big event of marriage requires a lot of focus and a lot of energy. But it’s just a “singular event” that doesn’t have a big impact on the long-term relationship (even couples who had a big wedding ceremony get divorced in a couple of years). Likewise, an IPO is just a singular event, and IPO prices will have very little impact on the company’s valuation in the long-term. Just like the wedding day, you’ll remember the price of IPO, but it has very little influence.

When asked whether LinkedIn is now sending a lot of e-mails (spam) to its users, Weiner said that nothing has changed, and users have the option to opt out of receiving the emails they don’t like. LinkedIn has about 200 million users worldwide.

LinkedIn Corporation (NYSE:LNKD) reported its Q3 earnings earlier in November. The company generated a revenue of $252 million, with 22 cents in earnings per share, beating the analysts’ estimate of $244.2 million in revenues and 12 cents a share in earnings.

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Vikas is a reporter and value investor. He contributes breaking news and Op-Ed columns about technology and politics on ValueWalk.
Vikas spends most of his time reading investment books, writing about finance and looking for stocks that have significant growth potential.